On November 22, 2018, the Ministry of Treasury and Finance issued a Circular on the Stamp Tax application to contracts and other documents prepared for converting contract prices determined in foreign currency to Turkish Lira.

On September 13, 2018, the Decree No. 32 regarding the Protection of the Value of Turkish Currency was amended by the Presidential Decree No. 85, which provided that the contract amount and the payment obligations under all sales and rental agreements on movable and immovable property (including vehicle rentals and financial leasing), employment contracts, service contracts and contracts for works, to the extent they are executed between Turkish residents, cannot be denominated in or indexed to foreign currencies. On October 6, 2018, the Ministry of Treasury and Finance had issued the exceptions to the prohibition to sign foreign currency denominated/indexed contracts. The new Circular aims to regulate the stamp tax application to the contracts and other documents prepared for converting contract prices into Turkish Lira pursuant to Decree No. 85 as follows:

• The contracts and other documents prepared for converting contract prices determined in foreign currency to Turkish Lira within the scope of the Decree No. 85 shall not be subject to stamp tax, if the conditions below exist together:

–           The amendments shall relate to the price only, not any other provisions of the contract (e.g., party, extension of time, addition of new business, etc.).

–           The total contract price which will be converted to Turkish Lira after the amendment shall not exceed the amount calculated by multiplying the price in foreign currency specified under the original contract and the current exchange rate determined by the Central Bank of the Republic of Turkey on the date of the amendment.

–           The amendment shall refer to the original agreement.

• The contracts and other documents prepared to convert contract price to Turkish Lira shall be subject to stamp tax on an excess amount, if the value of the stamp tax in the original agreement is not paid from the ceiling amount, provided that it contains a higher price than the amount calculated by the Turkish Republic Central Bank’s foreign exchange selling rates on the date of signing of the amendment contract or document. If, however, the stamp tax is paid from the ceiling amount, no stamp tax shall apply for such excess amount.
• The contracts and other documents prepared for converting the contract price to Turkish Lira shall be subject to stamp tax within the scope of the general stamp tax rules, if the relevant contract or document is prepared as a new agreement or contains amendments about price and other issues which results in a new agreement.

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